France

Coal, with luck, into cars

DEEP beneath the frostbitten fields of Lorraine, the flashlights dance crazily around the tunnel walls; an occasional stream of black gunge swirls past the metal props; a huge wheel carves relentlessly across a coal face incongruously named “Albert”. Jean-Paul Dechoux, engineering manager at the La Houve colliery, raises his voice over the constant din: “This mine has fed my family for a century.”

Not for much longer. There are only 985 miners left at La Houve, and by 2005 there will be none, nor at any other of the coal pits—in Alsace, the Pas de Calais, the Massif Central and the Midi—that fuelled France's industrial recovery after the second world war. When 700 Lorraine miners took to the streets this week to demand higher wages, their violence—police cars were burnt and the tax offices in Forbach, Metz and Thionville sacked—surely marked the death-throes of their industry.

The deadline of 2005 was set back in 1994, when the state-owned coal corporation, Charbonnages de France, signed the Pacte Charbonnier with all its unions except the Communists' CGT to accept economic reality—but to cushion its effects. The miners agreed they could not go on for ever producing coal that cost twice its market value; the government agreed that the workers would not simply be turfed on to the slag heap.

The result has been industrial restructuring on a scale that would have impressed even Margaret Thatcher. In 1948, more than 190,000 Frenchmen worked in the coal mines; by 1959 they were able to produce 59m tonnes a year. Today, there are only 6,000 miners, and their output, 70% of it from Lorraine, is a derisory 4m tonnes—a quarter of the amount that France imports each year from countries such as the United States, Australia, South Africa, Colombia and China, where the pit-head cost for a tonne of coal is at most $10 ($30-40 after transportation to Europe), against $100 in Europe.

La Houve's miners might reasonably resent their plight, sentenced to produce unwanted coal at an uneconomic cost. But under the Pacte, a miner with 25 years down the pit can retire as early as 45; and his children can hope for jobs in the new industries lured into the mining areas by a special Charbonnages de France subsidiary called Sofirem.

At any rate, that is the theory. Practice, inevitably, is not quite so perfect. Mr Dechoux jokes with Henri Mertz, the Sofirem representative in Lorraine, about the divorces provoked by ex-miners staying at home all day. And Sofirem's chief executive, Jean-François Rocchi, admits that about a quarter of business proposals put to him fail to work out.

Yet Mr Rocchi is proud of the overall record: more than 4,000 companies, and promises of 120,000 jobs, have been attracted to the mining regions over Sofirem's 32-year life. Subtract the broken promises, and around 75,000 jobs have been created through Sofirem's offer, mainly to small and medium-sized companies, of venture capital, loans, grants and expertise.

Certainly, the jobs have come at a cost: last year the Sofirem group invested some FFr298m ($51m) to create 5,285 jobs. Add the parallel help from a special industrialisation fund for the mining regions, and the state's total aid package amounts to just over FFr450m for the creation and maintenance of 7,337 jobs. A price worth paying, argue Sofirem's managers, and one that makes a lot more long-term sense than the German habit of pouring subsidies directly into pits.

Indeed so. Go to the pleasant towns that surround La Houve and it is hard to imagine all that subterranean dirt and danger. The local politicians are mainly from the right, business types keen to promote the region's virtues of geography and language. Where else in France has such a good claim to be at the heart of Europe, motorway-minutes from Germany, Luxembourg, Belgium and Switzerland, with a workforce that speaks both French and—thanks to past invasions—quite a bit of German?

Pierre Lang, president of the Freyming-Merlebach region, adds a few other temptations for outside investors: not just lower employment costs than in Germany but also energy that is 20% cheaper, and land that is up to ten times cheaper. Charles Stirnweiss, the mayor of Forbach, argues that with the flush of German reunification fading, more German investors seeking lower costs are coming to Lorraine, seeing it almost as a single cross-frontier region with the Saarland.

The result is a landscape dotted with small factories. Pride of place goes to the “Smartville” complex at Sarreguemines, which makes the comically small Smart car, born of Germany's Mercedes and the Swiss Swatch. But the temptations have their limits. This is still France, not Germany—and even as Messrs Lang and Stirnweiss were this month extolling the region's virtues, so some disgruntled chassis workers were on strike, temporarily blocking access to Smartville and, with it, the production of the Smart.